PRINCIPLES OF MGT
PRINCIPLES OF MGT MGT 201
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This 24 page Class Notes was uploaded by Merle Hoeger on Saturday September 26, 2015. The Class Notes belongs to MGT 201 at Clemson University taught by Tina Robbins in Fall. Since its upload, it has received 56 views. For similar materials see /class/214291/mgt-201-clemson-university in Business, management at Clemson University.
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Date Created: 09/26/15
Chapter 1 Efficiencythe means use resources people money materials wisely and cost effectively Effectivenessthe ends achieve results to make the right decisions and successfully carry them outto achieve goals 12 Six Challenges to Being a Star Manager Competitive Advantage ability of an organization to produce goods or services more effectively than competitors outperforming them 1 Being Responsive to Customers 2 Innovation Introduction of something new or better as in goods or services 3 Quality 4 Efficiency Diversity US becoming half minority Globalization gestures and symbols have different meanings Information Technology 1 Internet Global network of independently operating but interconnected computers linking hundreds of thousands of smaller networks around the world lowers costs of communication 2 Ecommerce Electronic commerce the buying and selling of goods and services over computer networks 3 EBusiness Using the Internet to facilitate every aspect of running a business a Email Electronic mail text messages and documents transmitted over a computer network b Project Management Software Programs for planning and scheduling the people costs and resources to complete a project on time c Databases Computerized collection of interrelated files affects pace and quality of decision making d Telecommute To work from home or remote locations using a variety of information technologies virtual not bound by time zones e Videoconferencing Using video and audio links along with computers to enable people located at different locations to see hear and talk with one another f Collaborative computing state of the art software to help people work better together goal setting and feedback eWorkbench g Knowledge management Implementation of systems to increase the sharing of knowledge and information throughout an organization also the development of an organizational structure and the tools that encourages continuous learning and sharing of knowledge and information among employees forthe purpose of making better decisions Happiness amp Life Goals culture and style affects happiness within an organization must like people and enjoy mentoring and helping others to grow and thrive 13 Four Principal Functions of Managers Management Process 1 Planning setting goals and deciding how to achieve them 2 Organizing arranging tasks people and other resources to accomplish work 3 Leading motivation directing and influencing people to work hard to achieve goals 4 Controlling monitoring performance comparing it to goals and taking corrective action 14 Levels amp Areas of Management Top Managers make long term decisions about the overall direction ofthe organization and establish the objectives policies and strategies for it CEO President a Future oriented dealing with uncertain highly competitive conditions Middle Managers implementthe policies and plans of top managers above them and supervise and coordinate the activities of managers below them a Non profit clinic director profit division head branch manager b Salaries 35000110000 First Line Managers make short term operating decisions directing the daily tasks of nonmangerial personnel department head foreman supervisor salaries 2550K place to start managerial career Functional Managers responsible for one organizational activity VP of Production Director of Finance General Managers responsible for many organizational activities EX VP 3 types of Organizations 1 Forprofit make money by offering products of services 2 MutualBenefit voluntary collections of members political parties unions advance members interest 3 Non profit managers are administrators provide services to clients success effectiveness of services delivered a Commonweal Organizations offer services to all clients within jurisdiction USPS police 15 Roles Managers Must Play Henry Mintzberg followed chief executives 1 Relies on Verbal Communication instead of Written email is the exception 2 Works long hours at intense pace 3 Fragmentation Brevity amp Variety only 110 activities took more than an hour Managerial Roles 1 Interpersonal Roles Figurehead Leader Liaison interact with people inside and outside their work units Figurehead A manager who performs symbolic tasks that represent an organization such as presenting ethical guidelines to other employees 2 Informational Roles Monitor Disseminator Spokesperson receive and communicate information most important part of managers job is information handling 3 Decisional Roles Entrepreneur Negotiator Allocator use information to make decisions to solve problems or take advantage of opportunities 16 Entrepreneurial Spirit Small outfits create 75 newjobs represent 997 employers and employ 50 of private workforce Entrepreneurship The process of taking risks to try to create a new enterprise 1 Entrepreneur Someone who sees a new opportunity for a product or service and launches a business to try to realize it most have fewer than 100 employees 2 lntrapreneur Someone who works inside an existing organization who sees an opportunity for a product or a service and mobilizes the organization s resources to try to realize it Gazelles nickname for entrepreneurial companies because they have speed and agility which make them successful Differences from Managers 1 Entrepreneurs start a business initiate new goods and service and managers grow and maintain it by coordinating resources to produce Both high need for achievement Both belief in personal control of destiny internal locus of control Both but more entrep high energy level and action orientation Both but more entrep high tolerance for ambiguity Mostly entrep Self confidence and tolerance for risk 539593quot Necessity entrepreneurs laidoff corporate workers immigrants who must earn a living 11 ofentrep Opportunity entrepreneurs start business out of desire more likely to succeed Entrepreneurs work the same amount as their counterparts in big business Money isn t the most important start up tool only 3100 raise venture capital are less distinguished students 17 Skills Star Managers Need Robert Katz through education and experience managers acquire technical conceptual and human skills 1 Technical job specific knowledge most important forfirst line managers 2 Conceptual ability to think analytically to visualize an organization as a whole and understand how the parts work together important fortop managers 3 Human ability to work well in cooperation with other people to getthings done Most important traits ability to motivate communication foreign work experience and high energy levels Chapter 2 21 Today s Management Outlook Evidence based management scientific method observe facts pose a solution make a prediction and test the prediction Overarching Perspectives 1 Historical classical behavioral and quantitative 2 Contemporary systems contingency and quality management Reasons to study understanding present guide to action new ideas clues to understand managers and clues to meaning of outside events 22Classical Viewpoint closed system Classical viewpoint finding ways to manage work more efficiently scientific and administrative Scientific Management scientific study of work methods to improve productivity of individual workers Frederick Taylor and Frank and Lillian Gilbreth Frank and Lillian Gilbreth time and motion study as a means of performing a task more efficiently studied how physical characteristics of the workplace lead to poor execution of tasks Frederick Taylor Father of Scientific Management Defining principles of scientific management 1 Soldiering deliberately working at less than full capacity 2 Increase efficiency in workplace by a Studying each part of task b Select workers with right ability c Give workers training and incentives d Use scientific principles to plan work methods Motion studies taught methods of best performing coworkers Differential Rate System more efficient workers earn high wages Administrative Management managing the total organization Henri Fayol and Max Weber Henri Fayol first to systematize management behavior wrote General and Industrial Management indicted majorfunctions of management 14 principle to increase efficiency of management process Max Weber bureaucracy with 5 features defined hierarchy of authority formal rules clear division of labor impersonality and careers based on merit Problem with Classical Viewpoint too mechanistic views humans as cogs within a machine ignoring human needs 23 Behavioral Viewpoint Behavioral viewpoint importance of understanding human behavior and of motivating employees toward achievement Hugo Munsterberg Mary Follett Elton Mayo Hugo Munsterberg father of industrial psychology psychologists contribute to industry by studying who is best fitted for specific jobs indentifying conditions under which people do their best work and influencing employees to follow management interest Mary Follett organizations should be more democratic w managers and employees working cooperatively 1 Organizations as communities managers as facilitators 2 integrationconflicts resolved by talking over solution 3 work process under control of workers Human side or organizational process workers are most familiar with theirjobs and should be included in process of work development worker empowerment cross functional teams Elton Mayo Hawthorne Effect employees work harder if they receive added attention 9 human relations movement Human Relations Movement proposed that better relations increase worker productivity Abraham Maslow hierarchy of human needs physiological safety social esteem and selfactualization Douglas McGregor Theory Xpessimistic negative view of workers Theory Yoptimistic positive view of workers Behavioral science relies on scientific research for developing theories about human behaviorthat can be used to provide practical tool for managers r 39 39 39 sociology 39 r and 24 Quantitative Viewpoint Quantitative management application to management of quantitative techniques such as statistics and computer simulations Management science focuses on using mathematics to aid in problem solving and decision making operations research Operations management focuses on managing the production and delivery of an organizations products or services more effectively work scheduling production planning and facilities location 25 Systems Viewpoint System set of interrelated parts that operate togetherto achieve a common purpose Systems viewpoint regards the organization as a system of interrelated parts a Subsystems parts making up the whole system b A part of the larger environment Four parts of a system 1 lnputs people money information equipment and materials required to produce goods and services 2 Outputs products services profits and employee satisfaction that are produced 3 Transformation process capabilities in management and technology that are applied to converting inputs into outputs 4 Feedbackinformation about the reaction of the environment are the customers buying the product Open system continually interacts with its environment closed little interaction with environment 26 Contingency Viewpoint Contingency viewpoint emphasizes that a manager s approach should vary according to the individual and the environmental situation What method is best to use underthese circumstances Open book management training employees in how the company is run 27 Quality Management Viewpoint includes quality control quality assurance and total quality management Quality total ability of a product to meet customer needs Quality control strategy for minimizing errors in production Walter Shewart used statistical sampling to locate errors by testing some ofthe items in production Quality assurance focuses on performance of workers urging employees to strive for zero defects less successful because employees have no control overthe design of the work process W Edwards Deming lectures on good management quality stems from constancy of purpose 8515 rule 85 chance system is at fault and 15 chance worker is at fault Joseph M Juran quality as fitness for use product should satisfy a customer s real needs Total Quality Management comprehensive approach led by top management 1 Make continuous improvement a priority 2 Get every employee involved 3 Listen and learn from customers and employees 4 Use accurate standards to eliminate problems benchmarking alertto how competitors do things better 28 Learning C 39 39 in Era of Change Peter Sende Learning organization actively creates acquires and transfers knowledge within itself and is able to modify its behavior to reflect new knowledge Consequences of fast past world Rise of virtual organization members are geographically apart working with online tools to connect 2 Rise of boundaryless organization highly adaptive whose members come together to collaborate on common tasks 3 Imperative for speed and innovation 4 Knowledge workers someone whose occupation is concerned with interpreting information hardest to find and easiest to lose 5 Importance of human capital economic or productive potential ofemployee knowledge experience and actions 6 Social capital potential of strong trusting and cooperative relationships Evidencebased management pfeffer and Sutton facing hard facts aboutwhat works and rejecting nonsense that passes for sound advice Building a learning organization 1 Commitment to learning 2 Generate ideas with impact ideas that add value for customers 3 Generalize ideas with impact reduce barriers to learning within organizations Whistleblower Protects employees of publicly traded companies from retaliation 0 Illegal to be treated unfairly if reported violation of law something that risked health endangered your life or were involved in an investigation 0 Only protected if tell boss about the problem and wait for correction and then have reason to believe boss won t do anything about it Chapter 3 31Stakeholders Inside the Organization Stakeholders people whose interests are affected by an organization s activities lnternal Stakeholders consist ofemployees owners and the board of directors 1 Employees 2 Owners all of those who can claim it as their legal property 3 Board of Directors elected by stockholders to see that company is being run accordingly Linear Career move up the organization in a series ofjobs SteadyState Career comfortable in a position and you stay with it and Spiral Career jobs that are different but build on each other best chance of reaching the top 320utside the Organization External Stakeholders people or groups in the organization s external environment that are affected by it Task Environment 11 groups that present you with daily tasks to handle 1 Customers pay to use an organization s goods or services 2 Competitors people that compete for customers or resources 3 Suppliers provides raw materials to other organizations services equipment labor 4 istributors helps another organization sell its goods and services to customers 5 Strategic Allies organizations that join forces to achieve advantages 6 7 8 U Employee Organizations ex Labor unions of laborforce represented has declined Local Communities rely on the business for theirtax base Financial Institutions 9 Government Regulators establish ground rules under which organizations may operate 10 Special lnterest members try to influence specific issues organize boycotts or picketing 11 Mass Media General Environment Microenvironment 6 forces that affect long term plans and decisions 1 Economic forces general economic conditions and trends unemployment inflation interest rates and growth 2 Technological forces new developments ion methods fortransforming resources into goods or services 3 Socio cultural forces influences and trends originating in a society s human relationships and values that may affect an organization interest in health and fitness 9 subway more shoes sold 4 Demographic Forces influences from changes in the characteristics of a population such as age gender or ethics 5 Political Legal forces changes in the way politics shape laws and laws shape the opportunities for and threats to an organization 6 International forces changes globally that will affect the organization 33 Ethical Responsibilities as a Manager Ethical Dilemma have to decide whetherto pursue a course of action that may benefit you or your organization but it unethical or illegal Ethics standards of right and wrong that influence behavior vary among cultures Ethical behavior behaviorthat is accepted as right according to standards Value system pattern of values within an organization Values permanent and deeply help underlying beliefs and attitudes that help determine a person s behavior 1 Value system stressing financial performance 2 Value system stressing cohesion and solidarity in employee relationships 4 Approaches to Deciding Ethical Dilemmas 1 Utilitarian forthe greatest good guided by what will result in the greatest good forthe greatest number of people managers use financial performance and cost benefit analysis lndividual for your greatest self interest long term that will help others act ethically in the short run to avoid harming others in the long run 3 MoralRights guided by the respect forthe fundamental rights of human beings 4 Justice respect for impartial standards N SarbanesOxley Reform Act of 2002 SarbOx establishes requirements for proper financial record keeping for public companies and penalties for non compliance resulting from Enron scandal cannot make personal loans and must reimburse company for bonuses Laurence Kohlberg proposed 3 levels of personal moral development 1 Preconventional follows rules obey authority to avoid consequences managers at this level are coercive and expect employees to be obedient 2 Conventional follows expectations of others conformist and adhere to others expectation managers are encouraging and are more team oriented most managers are at this level 3 Post Conventional guided by internal values managers follow own values and focus on needs of employees only15 h of all managers How Organizations can promote Ethics 1 Support by Top Managers of a Strong Ethical Climate tone at the top of the chain affects lower employees 2 Ethics Codes amp Training clearly states top management s expectations for all employees 45 largest corporations provide ethics training 3 Rewarding ethical behavior a Whistleblower employee who reports organizational misconduct to the public b 23 ofthose who complain still lose theirjobs c 1St amendment doesn t protect gvnt Workers from being punished for reporting misconduct 34Social Responsibilities of a Manager Social Responsibility manager s duty to take actions that wil benefit the interests of society as well as ofthe organization Against Social Respon Business job is to make profits and can become too distracted otherwise For Social Respon businesses create problems pollution and need to help solve them gives business a favorable public image 4 Managerial Approaches 1 Obstructionistmanagers put economic gains first and resist social responsibility behave unethically drug dealers 2 Defensive managers make the minimum commitment only obey laws represents Milton Friedman s position 3 Accommodative do more than the law requires if asked and demonstrate moderate responsibility 4 Proactive actively lead the way in being responsible for all stakeholders using the organization s resources to solve social problems Jeb Emerson former social worker don tjudge businesses on profits alone non and for profit businesses can contribute social and economic profits Blended value all investments are understood to operate simultaneously in both economic and social realms Sustainability economic developmentthat meets the needs of the presentwithout compromising the ability of future generations to meet their own needs being green GE amp Exxon Philanthropy not dying rich making charitable donations to benefit humankind Bill Gates How Does Being Good Pay Off Effect on Customers much more likely to buy from if socially responsible even if prices are higher Effect on Jobs 83 rated ethics very important stay at company longer bc of ethics Effect on Growth 80 buy from companies based on their perception of ethics Effect on Efficiency Honesty 9 less misconduct Effect on Revenue Less employee fraud up to 20 of each dollar earned Effect on Stock unethical firms earn abnormally negative returns Effect on Profits enhanced by a reputation for honesty and citizenship N FNJgt N9 35 New Diversified Workplace Diversity all the ways people are alike and unalike age gender race religion ethnicity sexual orientation I an Diversity Wheel Lee Gardenswartz amp Anita Rowe 1 Personality stable physical and mental characteristics responsible for a person s identity center of the wheel 2 Internal Dimensions human differences that exert a powerful sustained effect throughout every stage ofour lives gender age etc not within our control and are visible to other people 3 External Secondary Dimensions element ofchoice personal characteristics that people acquire education marriage religion income 4 Organizational Management status work location seniority content Age Older people Gender More Women Working glass ceiling metaphorfor an invisible barrier preventing women and minorities from being promoted to top executive jobs Race amp Ethnicity More people of color in workforce illegal immigrants are 120 of all workers Sexual Orientation Gays are more visible less discrimination 6 of workforce Americans with Disabilities Act prohibits discrimination against the disabled low pay but accommodations are cheap Educational Levels 1 college graduates are in jobs that they are overqualified for underemployed working at jobs that require less education than they have 2 high school dropouts and others many not have the proper literacy 90 million adults are illiterate Barriers to Diversity 1 Stereotypes Ethnocentrism belief that one s native culture is superiorto others 2 Fear of Reverse Discrimination employees are afraid blacks will be promoted overthe head of more qualified whites 3 Resistance to Diversity Program Priorities 4 Unsupportive Social Atmosphere might be excluded from camaraderie and social events 5 Lack of Support for Family Demands Comparing Affirmative Action Valuing Diversity and Managing Diversity Valuing Diversity Appreciation of individual differences and creating a workplace where everyone feels value Opinions are monitored by surveys focusing on attitudes and perceptions o Ethically driven by moral imperatives to change an unjust culture 0 ldealistic in nature All employees feel valued and accepted Managing Diversity Strategically driven behaviors and policies contribute to goals that lead to rewards and results 0 Pragmatic in nature focuses on benefits such as profit and productivity 0 Success is indicated through achieving organizational goals and objective Affirmative Action Legally driven with written plans and statistical goals for the hiring and promotion of target groups Reports are mandated by EEO laws 0 Groups in the organization will adapt and be assimilated by organizational norms 0 Equal opportunity in the workplace by changing demographics Foreign Corrupt Practices Act prohibits corrupt payments to foreign officials forthe purpose of obtaining or keeping business Chapter 4 41 39 39 quot 39 Collapse of Time amp Distance Globalization trend of the world economy toward becoming a more interdependent system Rise of Electronic Commerce a Global Village shrinking of time and space as airtravel and the electronic media make it easierfor people all around the world to communicate Marshall McLuhan b lnternet coded by Tim Berners Lee Global Economy increasing tendency of the economies ofthe world to interact with one another as one market instead of many national markets a Positive effects wealth in other countries 9 growth ofjobs and income in US b Negative effects outsourcing ofjobs universal effects of catastrophes Cross Border Business last 10 years have been megamergertime 42You amp International Management Multinational corporation business firm with operations in several countries BP Shell Toyota Multinational organization nonprofit with operations in multiple countries Red Cross 23 of Information Technology jobs will be taken over by foreign suppliers Ethnocentric managers we know best believe that their native country and language are superior their ways are more reliable than anyone else s ignorant Parochialism a narrow view in which people see things solely through their own eyes Polycentric manager they know best take the view that native managers in the foreign offices best understand native personnel and practices and the home office should leave them alone Opposite of Ethnocentric Geocentric manager what best is what s effective accept differences and similarities and that they should use whatever technique is most effective payoff is the greatest Expatriate manager a manager living or working in a foreign country 43Expanding Internationally Why Expand Availability of Supplies 2 New Markets 3 Lower Labor Costs maquiladoras manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexicans 4 Access to Finance Capital 5 Avoidance of Tariffs amp Import Quotas How Companies Expand Global Outsourcing using suppliers outside the company to provide goods and services Lowest9 highest risk global outsourcing importing franchising jointventures wholly owned subsidiaries 2 Importing Exportingcountertradingbartering goods for goods 3 Licensingcompany allows a foreign company to pay it a fee to make or distribute the first company s product Franchising allows a foreign company to pay it a fee and a share in return for using the brand name 4 Joint Venture strategic alliance share the risks and rewards of starting a new enterprise together best way if country forbids foreigners from ownership 5 Wholly Owned Subsidiary foreign subsidiary that is totally owned and controlled by an organization sta venture foreign subsidiary that the owning organization has built from scratch 44Economic amp Legal Differences Economic Differences 1 FreeMarket Economy production of goods and services is controlled by private enterprise and the interaction ofthe forces of supply and demand rather than the government US amp Britain citizens usually have higher incomes Command Economy central planning government owns most businesses and regulates the amounts types and prices of goods Cuba N Korea China Vietnam N 3 Mixed Economy most of the important industries are owned by the government but others are controlled by private enterprises Privatization state owned businesses were sold off to private enterprise Britain Indigenization aws require that citizens own a majority of whatever company is operating there Developed countries high level of economic development and generally high average level of income of foreign investment is directed towards developed countries US Canada Europe Australia Japan New Zealand Lessdeveloped countries high birth rates Brazil China Haiti Mexico and Zambia Infrastructure consists ofthe physical facilities that form the basis for its level of economic development schools railroads airports Exchange Rate rate at which one country s currency can be exchanged for another country s currency Democratic government rely on free elections and representative assemblies different national attitudes towards bureaucracy and monopolies can make it difficult to do business Totalitarian government ruled by a dictator or single political party Cuba Indonesia risky because political tides may change Political Risk risk that political changes will cause loss of a company s assets or impair its foreign operations 1 Instability riots or civil disorders Italy has had 60 governments since VWVII 2 Expropriation a government s seizure of a foreign company s assets Foreign Corrupt Practices Act of 1977 makes it illegal for employees of US companies to bribe political decision makes in foreign nations acceptable in many other countries 4 5World of Free trade Toptrading partners Canada Mexico China Japan Germany UK 8 Korea Taiwan France and Malaysia Free trade movement of goods among nations without political or economic obstruction Barriers to International Trade trade protectionism use of government regulations to limitthe import of goods to protecttheir domestic industries against foreign competition 1 Tariffs customs duty ortax levied on mainly imports a Raise money forthe government revenue b Raise the price of imported goods to make the prices of domestic goods more competitive protective tariff 2 Import quota limit on the numbers ofa product that can be imported China agreed to cancel car import quotas a Dumpingforeign company s exporting products abroad at a lower price than the price in the home market to drive down the costs of a domestic product 3 Embargo complete ban on the import or export of certain products Organizations Promoting Trade 1 World Trade Organization designed to monitor and enforce trade agreements 146 member countries based on the General Agreement on Tariffs and TradeGATT World Bank provide low interest loans to developing nations for improving transportation education health and communication 184 nations mainly US Europe amp Japan concentrated on Internet International Monetary Fund assist in smoothing the flow of money between nations 182 members last resort lenderthat makes short term loans bc unfavorable balance of payments Trading bloc economic community group of nations within in a geographical region that have agreed to remove trade barriers with one another European Union APEC Mercosur and NAFTA 1 North America Free Trade Agreement trading bloc consisting ofthe US Canada and Mexico formed in 1994 eliminate 99 of tariffs and quotas 418 billion trade deficit European Union 25 trading partners in Europe 455 million consumers world s largest free market euro as consistent currency AsiaPacific Economic Cooperation group of21 Pacific Rim countries whose purpose is to improve economic and political ties Mercosur largesttrade bloc in Latin America and has four core members Argentina Brazil Paraguay and Uruguay striving forfull economic integration Most favored nation a condition in which a country grants other countries favorable trading treatment such as a reduction of import duties 9 promote more stable ties 46 Cultural Differences Culture shared set of beliefs values and patterns of behavior common to a group of people Lowcontext culture shared meanings are primarily derived from written and spoken words great Britain north America Highcontext culture people rely heavily on situational cues for meaning when communicating with others China Korea Japan Hofstede s Model of Four Cultural Dimensions collected data from IBM employees US ranked high on individualism low on power distance low on uncertainty avoidance and moderately high on masculinity 1 2 Individualismcollectivism how loosely ortightly are people socially bonded Power distance how much do people accept inequality in power a High power distance Mexico India people accept inequality b Lower power Germany Australia people expect equality in power Uncertainty avoidance how strongly do people desire certainty a High uncertainty Japan France Greece intolerance for risk b Low uncertainty avoidance US Sweden high tolerance Masculinityfemininity a Strong masculine Japan Mexico Austria Germany b Embrace relationship oriented feminine traits Sweden Norway Denmark GLOBE project massive and ongoing cross cultural investigation of nine cultural dimensions involved in leadership and organizational process started 1993 by Robert J House Other cultural variations 1 2 3 Language Interpersonal Space North America 34 feet Asian 1 foot Arabs even closer Time Orientation a Monochronic time American business doing one thing at a time set schedules b Polychromic time doing more than one thing at a time Mediterranean Latin America and Arab cultures multitasking 4 Religion no agreement among religion on the most importantwork related value Chapter 5 Planning coping with uncertainty by formulating future courses of action to achieve specified results Benefits of Planning checks progress coordinates activities thinking ahead and cope with uncertainty 3 Types of Uncertainty 1 State w aim 39 is 394 A r quot quot will it snovW 2 Effect uncertainty effects of environmental changes are unpredictable freezing and hypothermia 3 Response uncertainty when the consequences ofa decision are uncertain in a snowstorm do you want clothes or a tent Reponses to Uncertainty Raymond Miles amp Charles Snow 1 Defenders expert at producing and selling narrowly defined products stick with what we do best 2 Prospectorsdevelop new products and seek out new markets create own opportunities 3 Analyzers let other organizations take the risks of product development and then imitate 4 Reactors make adjustments only when forced to by environmental pressures wait until crisis Adaptive cycle entrepreneurial engineering administrative 52 Fundamentals of Planning Mission Statement Reason for being expresses the purpose ampVision Statement What do we want to become 1 Strategic planning by top management determine long term goals for next 15 years Tactical planning by middle managers determine what contributions their departments or similar work unites can make with their given resources during the next 2 years 3 Operational planning by first line managers determine how to accomplish specific tasks with available resources in next 152 weeks hiring additional personnel N Much harderto formulate a vision than to create methods to manage and measure the performance Goals objective specific commitment to achieve a measurable result within a stated period 0 time 1 Strategic goals set by and fortop management and focus on objectives forthe whole company 2 Tactical goals set by and for middle managers a division and focus on actions needs to achieve strategic goals 3 Operational goals set by and forfirst line managers and are concerned with short term matters associated with realizing tactical goals 9 meansend chain Operational plan 1 yr period defines how you will conduct business based on the action plan indentifies dear targets such as revenue cash flow and market share Standing plan developed for activities that occur repeatedly over a period of time 1 Policy outlines general response to a designated problem workplace doesn t allow swearing 2 Procedure outlines response to particular problems how to ring up a customer 3 Rule standing plan that designates specific required action no smoking anywhere in the building Singleuse plan developed for activities that won t be repeated in the future 1 Program encompasses a range of projects or activities space program 2 Project less scope and complexity than a program Discovery space shuttle SMART goals 1 Specific 2 Measurable quantifiable 3 Attainable challenging but realistic 4 Results Oriented complete acquire increase 5 Target dates 53 PlanningControl Cycle Planning 1 Make the plan 2 Carry out the plan Control 3 Control the direction by comparing the results with the plan 4 Control the direction by correcting deviations and improving future plans 54 Promoting Goal Setting Management by Objectives MBO by Peter Drucker motivate rather than control subordinates 1 Jointly set objectives by manager and subordinate to make them practical a Improvement b Personal development c Maintenance 2 Develop Action Plan plan to attain the objectives for individuals and departments Review Performance about every 3 months Appraisal amp Rewards compare performance with objectives give raises or bonuses if met or redefine objective for next period or give demotion if not met PF For MBO to be successful 1 top management must be committed gain in productivity by 56 2 Applied Organization wide 3 Must cascade objective are structured through a hierarchy 55 Pro39ect Planning preparation of singleuse plans or projects Project management achieving a set of goals through planning scheduling and maintaining progress EX skunkworks project team whose members are separated from the normal operation of an organization and asked to produce a new innovative product Project Life Cycle 4 stages from start to finish 1 Definition look at the big picture state the problem look at risks identify the project s goals and determine budget 2 Planning considerthe details needed to make it happen identify facilities and equipment people needed and schedule and coordination efforts 3 Execution actual work state define management style monitor progress issue changes prepare status reports main focus is to complete project on time and under budget 4 Closing project is accepted by client possibly write a report Action obtaining building clearances Chapter 6 61 Dynamics of Strategic Planning Strategy large scale action plan that sets the direction for an organization find out whatthe customers want and then provide it to them cheaply and quickly Strategic management process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals Reasons to adopt Strategic management amp planning 1 Providing direction amp momentum 2 Encouraging New ldeas stresses importance of innovation 3 Developing a Sustainable Competitive advantage Michael Porter Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company 1 Few needs many customers Jiffy lube provides only oil changes but to many people 2 Board needs few customers Bessemer Trust targets only the really wealthy S Broad needs many customers 62 Strategic Management Process 5 steps 1 Establish Mission amp Vision a Mission customers products geographical areas economic objectives basic values b Vision set standards of excellence clarify direction inspire enthusiasm ambitious 2 Grand Strategy explains howthe organization s mission is to be accomplished where it is headed and where it should be headed a Growth strategy involves expansion improve products acquisitions increase promotion b Stability strategy involves little or no significant change too fast growth leads to mess ups needs a period of consolidation c Defensive strategy involves reduction in the organization s efforts reduce costs sell assets bankruptcy 3 Strategy formulation choosing among different strategies and altering them to best fit the needs 4 Strategy implementation putting plans into effect overcoming resistance check on roadblocks 5 Strategic control monitoring the execution of strategy and making adjustments rethink policies redo budgets SWOT analysis situational search forthe strengths patented products weaknesses discriminate lack of cooperation obsolete facilities opportunities untapped market higher disposable income and threat falling barriers to entry foreign competitors Forecasts 1 Trend analysis extension of past series of events into the future 2 Contingency planning scenario analysis creation of alternative hypothetical but equally likely future conditions Porter s model for industry analysis 1 2 3 4 5 Threats of New Entrants takes away customers Bargaining power of supplier can t get the materials 9 other company sees spike in sales Bargaining power of buyers can shop around to getthe best price Threats of Substitute Products ex Self sufficient instead of buying oil Rivalry among competitors Po rter s fou r competitive strategies 1 2 3 4 Costleadership wide market keep the costs and prices of a product below the competitor Differentiation wide offer products that are unique and superiorto those of competitors use brands to distinguish Ritz Carlton Costfocus narrow keep the costs and prices below those of competitors and target a market low end products in discount stores Focused differentiation narrow offer products that are so unique compared to competitors and offer to target narrow market Ferraris Product life cycle 1 2 4 Introduction new product is introduced differentiation orfocus strategy probably losing money Growth stage most profitable customer demand increases sales grow and competitors enterthe market Maturity product starts to fall out of favor and sales fall off because of competition increase need to reduce costs and become more efficient Decline product is withdrawn from the market Single product strategy sells only one product within its market benefit focus risk vulnerability Diversification operating several businesses to spread risk a b Unrelated Related Burberry rainwear clothes accessories 1 Reduced Risk Multiple products 2 Management efficiencies administration spread out 3 Synergy sum is greaterthan all the parts worth more togetherthan separately 3 core processes of business 1 people 2 strategy 3 operations 9 success of execution Sources of Conflict scare resources overlapping authority incompatible goals bad reward systems Types of Conflict 1 2 3 4 lnterpersonal between individual members lntragroup between members ofa group team or department lntergroup between members of different groups lnterorganizational between different organizations Nonwrongful disassociations of partners death withdrawal expulsion Dissolve partnership he wants to sell to the highest bidder Steering the committee Patrick black guy knows his position and it isn t franks specialty says he can work better on own 1 Weren t listening to him They want someone to come help him out Cultural Differences japsjust want to talk Engage people keep it simple focused keep moving Chapter 7 71 Nature of Decision Making Decision choice made from among available alternatives Decision making process of identifying and choosing alternative courses of action Types of Decisions 1 Programmed Decisions repetitive and routine fairly structures and occur frequently usually follow established rules 2 Nonprogrammed decisions occur under honroutihe unfamiliar circumstances are usually in response to unpredictable opportunities and threats farther you move up the hierarchymore important to make these decisions General Decision Making Styles Risk Qrogensity willingness to gamble or to undertake risk for the possibility of gaining an increased profit competitiveness woman shy away from competition Decision Making style combination of how an individual perceives and responds to information value orientation reflects the extent to which a person focuses on either task and technical concerns or people and social concerns tolerance for ambiguitythe extent to which a person has a high need for structure in his life 1 Directive low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions logical practical and systematic in their approach to solving problems Action oriented like to focus on facts autocratic focus on short run 2 3 Analytical higher tolerance for ambiguity and will over analyze a situation consider more information and alternatives careful decision makers who take longer but respond well to new situations Conceptualfocus on the people or social aspects of a work situation can foster an indecisive approach to decision making Behavioralmost people oriented wishywashy approach to decision making and hard time saying no supportive and receptive to suggestions 72 Decision Making Rational model of decision making classical explains how managers should make decisions it assumes managers will make logical decisions that will be the optimum in furthering the organization s best interests 4 stages 1 Indenti the problem or opportunity make improvements by diagnosis analyzing the underlying causes 2 Think up Alternate solutions 3 Evaluate Alternatives amp Select a solution is it ethical Feasible Effective 4 Implement amp Evaluatesuccessful implementation if plan carefully and be sensitive to those affected if the action isn t working give it more time change it slightly try another alternative or start over Problems with Rational Model prescriptive doesn t describe how managers actually make decisions Assumptions ofthe Rational Model complete information no uncertainty logical analysis best decision for the organization Nonrational Model ofdecision making explains how managers make decisions assume that decision making is nearly always uncertain and risky making it difficult to make optimal decisions 1 2 Satisficing Model Bounded Rationality quotSatisfactory is good enoughquot by Herbert Simon the ability of decision makers to be rational is limited because of complexity time money cognitive capacity imperfect information different priorities and conflicting goals Incremental Model quotThe least that will solve the problemquot managers take small short term steps to alleviate a problem Intuition Model is making a choice without the use of conscious thought or logical inference Knowledge management development of an organizational culture and the tools processes that encourage continuous learning and sharing of knowledge among employees to make better decisions 1 Explicit Knowledge llTextbook information that can easily be put into words and numbers and be shared 2 Tacit Knowledge llTricks of the trade individua based intuitive acquired through experience and is hard to express and share Sharing Knowledge 1 High tech solutionsexplicit knowledge email and databases 2 Low tech solutionstacit knowledge shared directly through networking and meetings 73 Evidence Based decision making amp analytics Evidence Based Management by Pfeffer and Sutton attitude of wisdom 3 truths few really new ideas true is better than new doing well usually dominates 7 implementation principles unfinished prototype just facts see organization as outsiders do isn t just for executives still need to sell it slow the spread of bad practice what happens if people fail Reasons it s hard to be evidence based too much evidence not enough good evidence doesn t apply mislead side effects outweigh cure and stories are more persuasive Analytics purest application sophisticated forms of business data analysis portfolio analysis time series forecast attributes 1 Predictive modeling data mining technique used to predict future behavior and anticipate the consequences 2 Multiple applications 3 Support from the top 74 Ethical decisions Ethics officer trained about matters of ethics in the workplace resolving ethical dilemmas Decision tree graph of decisions and their possible consequences used to create a plan to reach a goal ask s legal Maximize shareholder value Ethical Would it be ethical to not take the action General Moral Principles for Managers principled appropriate and defensible by Hodgson dignity of life autonomy honesty loyalty fairness humaneness and the common good 75 Group Decision making Advantages greater pool of knowledge different perspectives intellectual stimulation better understanding of decision rationale and deeper commitment Disadvantages few people dominate groupthink strive to agree for unanimity and avoid making the best decision satisficing goal displacement primary goal is subsumed by a secondary goal 4 characteristics of groups less efficient size affects decision quality may be too confident knowledge counts When a group can help in decision making increase quality increase acceptance increase development Participative Management PM process of involving employees in setting goals making decisions solving problems and making changes in the organization 9 increase motivation innovation and performance because it helps employee fulfill basic needs autonomy meaningfulness and interpersonal contact Factors that help make PM work top management involved managers are supportive employee trust employees are ready no interdependent jobs and is implemented with TQM Achieving consensus Dos listen involve seek out the reasons behind arguments and dig for facts Don ts log rolling and horse trading making agreement to keep relations amicable and using a vote Group problem solving techniques 1 Brainstorming technique used to help groups generate multiple ideas and alternatives for solving problems developed by Osborn brainwriting members of a group come together over a computer network to generate ideas Pros expression of as many new ideas as possible Cons unproductive ideas and isn t appropriate for evaluating and selecting solutions 2 Nominal group purpose is to generate ideas and evaluate solution which members do by writing down as many ideas as possible the ideas are listen on a blackboard and then there is a secret vote members don t talk to each other in the beginning Pros generates more ideas than brainstorming Cons bc of secret ballot can t tell why individuals voted each way 5 Delphi group consensus of experts uses physically dispersed experts who fill out questionnaires to generate ideas and the judgments are averaged to achieve an expert consensus Pros useful when face to face discussions are impractical when disagreements are likely and when some people dominate the discussion Cons can t ask questions to each other P Computer aided decision making a Chauffeurdriven system answer predetermined questions b Group driven system express ideas anonymously over network roadblocks to consensus are reduced Pros produces greater quality and quantity of ideas for large groups Cons led to decreased group effectiveness and member satisfaction increase time to complete tasks 76 Overcome barriers to decision making Four ineffective reactions 1 Relaxed avoidance no point in doing anything nothing bad s going to happen manager takes no action in the belief that there will be no great negative consequences 2 Relaxed change easiest way out manager realizes that complete inaction will have negative consequences but opts for the first available alternative with low risk form of satisficing 3 Defensive avoidance no reason to explore alternatives manager can t find a good solution and follow by procrastinating passing the buck or denying the risk of consequences posture of resignation and a denial of responsibility 4 Panic I ve got to do something to get rid of the problem manager is so frantic to get rid of the problem that they can t deal with the situation realistically Effective Reactions deciding to decide manager agrees that they must decide what to do about a problem and take effective decision making steps 1 Importance how high of a priority 2 Credibility how believable is the information about the situation 3 Urgency how quickly must I act 6 common decision making biases Heuristicsstrategies that simplify the process of making decisions 1 Availability bias managers use information readily available from memory to make judgments may not present a complete picture of a situation 2 Confirmation bias people seek information to support their point of view and discount data that do not 3 Representativeness bias tendency to generalize from a small sample or single event 4 Sunk cost bias fallacy managers add up all the money already spent on a project and conclude it is too costly to simply abandon it Concorde effect 5 Anchoring and adjustment bias tendency to make decisions based on an initial figure raising salary by standard percentage 6 Escalation of commitment bias whereby decision makers increase their commitment to a project despite negative information about it prospect theory decision makers find the notion of loss more painful than giving up the possibility of a gain Chapter 8 81 Organizational Culture Organizational culture corporate culture Edgar Schein system of shared beliefs and values that develops within an organization and guides the behavior of its members Invisible eve Core culture consists of values beliefs and assumptions 2 sources the visions and the outlook Visible eve observable culture expressed in symbols stories heroes and rites and rituals 1 Symbol objects act quality or event that conveys meaning to others 9 most important values N Story narrative based on true events emphasizes particular value learn history 5 Hero person whose accomplishments embody the values of the organization motivate other employees to do the right thing 4 Rites and rituals activities planned and unplanned that celebrate important occasions and accomplishments reward top sellers Functions of Organizational Culture Gives members an organizational identity Facilitates collective commitment Promotes social system stability effectively manage conflict and change 93 Shapes behavior by helping employees make sense of their surroundings 82 Developing high performance culture 3 perspectives for enhancing economic performance 1 Strength perspective strong assume s that the strength of a corporate culture is related to a firm s longterm financial performance creates goal alignment motivation and the appropriate controls needs to improve performance cons reinforces norms of arrogant and resistant to change managers 2 Fit perspective organization s culture must alight fit with its business or strategic context 9 foster higher financial performance 3 Adaptive perspective most effective cultures help organizations anticipate and adapt to ftyenvironmental changes financial performance was highest for adaptive Ways to become embedded in organization 1 Formal statements of mission vision values WalMart Sam Walton respect for the individual service to customers striving for excellence Slogans amp sayings Stories myths amp legends Leader reactions to crisis Role modeling training amp coaching Physical design work environments and buildings Rewards amp Promotions Goals amp Performance criteria for recruiting and retiring people EDOONO XEJ39IPUJN Measurable amp controllable activities 10 Organizational structure 11 Procedures for selfdevelopment 83 What is an Organization Organization Chester Barnard system of consciously coordinated activities or forces of two or more people for profit nonprofit and mutual benefit
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